The bottom of the housing market has come and gone in South Dakota, which has suffered little pain from the financial crisis. Employers are adding jobs as the state’s economy grows amid massive economic problems else where.
Few foreclosures have troubled the state’s economy even as job losses rose during the recession. Like its neighbor, North Dakota, the state had little subprime and Alt-A mortgage lending to damage its real estate markets. The big banks and mortgage companies that handed out their easy money loans didn’t make much of a market to sell loans in South Dakota.
In Rapid City, home sales were boosted by the federal tax credit as the area pulled out of its housing downturn. Local lending is projected to help the area’s market as Rapid City works out of the financial crisis. The construction of new homes for many newcomers moving to the area is expected to strengthen over the next year, pushing home prices higher an average forecast at 3.8% for the year.
In Black Hills, where new developments were built during the national boom home sales are already picking up slowly, and should grow over the remainder of the year. Black Hills average home prices are forecast to increase 3.5% in 2010 as many newcomers to the area move into their new homes.
In Sioux Falls, national economic stress and the pitfalls of Wall Street have actually helped the local housing market, keeping mortgage rates near record lows. The economy remains one of the strongest for a city its size nationally as businesses add to pay rolls in the state’s largest city.
Sioux Falls has a robust agriculture industry, boosted by growth in ethanol for corn growers. As home sales slowed, home buyers became reluctant to make a decision until the federal tax credit was imposed to push sales higher. Mortgage lending offered by local banks and credit unions are helping home sales, and that trend should continue as Sioux Falls moves closer to higher housing prices forecast to be 3.5% above last year on average.
There are plenty of job openings in Sioux Falls and other areas of South Dakota in many industries including logging, mining, construction and hospitality. Aberdeen also needs new workers as the housing market shows signs of strengthening as newcomers move to the area.
Since few foreclosures impacted the state, home prices didn’t fall much during the slowdown, and the state is likely to see more growth than many others, despite its cold winter months. Aberdeen didn’t really experience a housing bubble, and like much of South Dakota is on more of a solid footing forecast to see average housing inflation of 3.1% for the year.